There are many myths surrounding the act of settling credit card debt. Rather than research to see how many of the half-truths that circulate are true, many debtors take myth as truth and do nothing about their own situations. Arming yourself with the facts is the first step in a process that could help you turn around a sinking credit situation and move you closer to settling debt with credit card companies.
If you are one who shrinks at the idea of having to talk directly to creditors, this process might not be an easy one for you. It is, however, necessary if you ever hope to clean up your credit record and get your financial life back on track. Here are some tips on settling credit card debt to get you started:
1. Be sure that the debt is yours. If you do not have a current credit report in your hand from all three credit-reporting bureaus, go get one immediately. You are in no position to settle credit card debt if you have false information on your report. After you receive your credit reports, you should verify that everything listed is a debt you actually created.
2. Be sure the statute of limitations for collecting debt in your state has not run out. Creditors have a certain amount of time to sue you for a debt, and the time limits are different for each state. If your debt is older than the statute of limitations, the creditor cannot sue you for it. If you are negotiating credit card debt for yourself, it helps to know if you are wasting time on a debt that you can no longer be sued for.
This does not mean that the creditor cannot place a negative entry on your credit report, though. In many cases, negative credit can be reported for seven years. Bankruptcies can be reported for up to 10 years. If you apply for a line of credit of more than $50,000, or if you apply for a job with a salary of more than $20,000, there is no statute of limitations. Tax liens are reported for seven years from the time that you pay the taxes.
3. Do not expect to automatically get your debt reduced or cut in half just because you are negotiating. The creditors do not have an obligation to do that for you. The usual reasons that creditors are more open to settling credit card debts in this manner are: divorce, health issues that have created high medical bills, job loss, or some other hardship.
4. Understand that settling credit card debt comes with some risk of damaging your credit score even more than it is already damaged. Your credit score will not be affected if you are negotiating on your own behalf. It will, however, be negatively impacted if you halt payments on accounts you have settled through a debt settlement company, and it shows up on your credit report as a default or delinquent payment. Be sure you know how any settlement will affect you and your credit score.
There are many myths surrounding the act of settling credit card debt. Rather than research to see how many of the half-truths that circulate are true, many debtors take myth as truth and do nothing about their own situations. Arming yourself with the facts is the first step in a process that could help you turn around a sinking credit situation and move you closer to settling debt with credit card companies.
If you are one who shrinks at the idea of having to talk directly to creditors, this process might not be an easy one for you. It is, however, necessary if you ever hope to clean up your credit record and get your financial life back on track. Here are some tips on settling credit card debt to get you started:
1. Be sure that the debt is yours. If you do not have a current credit report in your hand from all three credit-reporting bureaus, go get one immediately. You are in no position to settle credit card debt if you have false information on your report. After you receive your credit reports, you should verify that everything listed is a debt you actually created.
2. Be sure the statute of limitations for collecting debt in your state has not run out. Creditors have a certain amount of time to sue you for a debt, and the time limits are different for each state. If your debt is older than the statute of limitations, the creditor cannot sue you for it. If you are negotiating credit card debt for yourself, it helps to know if you are wasting time on a debt that you can no longer be sued for.
This does not mean that the creditor cannot place a negative entry on your credit report, though. In many cases, negative credit can be reported for seven years. Bankruptcies can be reported for up to 10 years. If you apply for a line of credit of more than $50,000, or if you apply for a job with a salary of more than $20,000, there is no statute of limitations. Tax liens are reported for seven years from the time that you pay the taxes.
3. Do not expect to automatically get your debt reduced or cut in half just because you are negotiating. The creditors do not have an obligation to do that for you. The usual reasons that creditors are more open to settling credit card debts in this manner are: divorce, health issues that have created high medical bills, job loss, or some other hardship.
4. Understand that settling credit card debt comes with some risk of damaging your credit score even more than it is already damaged. Your credit score will not be affected if you are negotiating on your own behalf. It will, however, be negatively impacted if you halt payments on accounts you have settled through a debt settlement company, and it shows up on your credit report as a default or delinquent payment. Be sure you know how any settlement will affect you and your credit score.
Tagged as:
settling credit card debt
Comments on this entry are closed.